It matters because a creditor who never replies is counted as having accepted, and what a protected trust deed is sets out what that acceptance then binds them to.

Part 14 of the 2016 Act came into force on 30 November 2016 and governs every trust deed granted since. Here is what the objection test actually says, who can defeat it, and what happens if they do.

No. A trust deed is a deed you grant, not a deal you negotiate, and a creditor’s only options are to accede, to object, or to do nothing at all.

Where the deeming rule sits

Section 170(2) of the Bankruptcy (Scotland) Act 2016 says the deed must be acceded to by the creditors the trustee is required to send documents to, and then deems that accession unless enough of them object in writing.

That is the opposite of how it is usually described. The test is whether enough creditors object, not whether enough approve, and a creditor who never replies is counted as having accepted.

What your creditors actually receive

Within seven days of registration of the Form 1 notice, the trustee sends every known creditor the trust deed itself, a copy of the register notice and the Form 2 claim form. A statement of your affairs goes with it.

That statement includes your Form 2A income and expenditure, details of any excluded assets, the expected contribution and the anticipated dividend. Form 3 Part 1, the trustee’s statement of anticipated realisations, is in the same pack.

So creditors see the numbers before the five weeks start running, which is why how you apply for a trust deed in Scotland spends so long on the paperwork.

Written objection from a majority in number of your notified creditors, or from creditors holding no fewer than one third in value. Either limb on its own prevents protection.

The test, line by line

The two limbs are alternatives rather than a combined score. Nothing is added together and nothing has to be reached in your favour.

Why the value limb is the one that usually bites

Where you owe small sums to several creditors and a large sum to one or two, that shape puts the decision in the hands of the biggest lender rather than the crowd.

The Accountant in Bankruptcy’s guidance for trustees adds a detail that catches people out. A creditor who never submits a claim still has its debt value counted when the one third threshold is tested.

So a single credit card provider or a local authority holding a third of your balance can decide the question on its own. Where council tax is the bulk of what you owe, whether council tax can go into a trust deed is worth reading alongside this.

Five weeks. Section 193 fixes the relevant period at five weeks beginning with the date the section 169 notice is registered in the Register of Insolvencies.

How the window is counted

AiB’s guidance describes the period as beginning the day after publication, so a Tuesday publication ends at midnight on the following fifth Tuesday. Section 193 is the provision that sets the length.

Objections arriving after the window closes cannot be recorded, on AiB’s own statement of the position. A creditor that misses the deadline is in the same position as one that never wrote.

What happens either side of it

Adding the statutory steps together gives a floor of roughly six weeks from signing and an outer limit of roughly eleven or twelve. That is arithmetic from the legislation rather than an observed average, because no average is published.

The date that counts is the date AiB registers the deed, not the date you signed it. What happens between signing a trust deed and it becoming protected covers that gap in full.

Because the English arrangement works that way and the wording has been copied across. The Scottish rule then gets stated as a consent test, in several different and inconsistent shapes.

The shapes in circulation

• That half the people you owe must agree. The statute asks whether a majority in number object.
• That creditors holding two thirds of the debt must agree. No two thirds threshold appears anywhere in Part 14.
• That creditors holding a third must agree. A third in value is the objection threshold, pointing the other way.
• That the majority of creditors must be happy with the terms. Nothing in section 170(2) asks whether a creditor is happy.

Why the inversion matters to you

A reader who thinks approval is needed will assume creditors have to be persuaded, and may pay for help doing it. Silence is already accession, so there is nothing to persuade a silent creditor of.

The mirror image is just as damaging. Someone told that one hostile creditor automatically sinks a trust deed may rule out the right solution for no reason.

The deed survives but the protection does not. It remains an ordinary, unprotected trust deed, which does not bind any creditor that refuses to accede.

What an unprotected deed leaves you with

AiB puts it plainly: unprotected trust deeds do not obligate creditors who refuse to accept the terms. Such a creditor can raise a court action, carry out diligence, and petition for your sequestration as though the deed did not exist.

You would still have a trustee and a payment plan, and no statutory shield. Section 173 would not cut an existing earnings arrestment, which is the whole point of whether a trust deed stops a wage arrestment.

The other way protection is lost at the outset

Objections are not the only failure point. If the trustee misses the four week deadline in section 171 for applying to AiB, the deed is not protected either.

AiB is blunt about it, and only a sheriff can direct resubmission. What happens if your trust deed fails separates never achieving protection from a protected deed collapsing later, because they are different problems.

Yes, as to recovery. Section 172(1)(a) gives a creditor who was not notified, or who objected in time, no higher right to recover the debt than a creditor who acceded.

Bound is not the same as disarmed

Under section 172 that creditor is bound, but section 177 lets it petition for your sequestration within five weeks of registration of the section 169 notice.

After that window the grounds narrow sharply. The creditor must aver that the provision for distribution is or is likely to be unduly prejudicial, or that the trustee has refused to discharge you.

The sheriff awards sequestration only if satisfied that it is in creditors’ interests or that those averments are correct. That is a much higher bar than an objection inside the five weeks.

The one route back for creditors later on

Deemed accession can be undone. Section 172(2), inserted with effect from 1 July 2024, provides that creditors cease to be deemed to have acceded where AiB agrees under section 184A that you should not be discharged.

AiB’s position is that creditors are then free to enforce debt recovery action. What happens if you miss a payment on your trust deed sets out the statutory steps a missed payment actually goes through.

The creditor decision runs the opposite way. An IVA is approved only where creditors representing 75% by value vote in favour, while a trust deed is protected unless enough creditors object.

The two side by side

Anything describing a creditors’ meeting, a proposal being approved or a supervisor is describing Part VIII of the Insolvency Act 1986. The Scottish position is on mygov.scot’s trust deeds page and in Part 14 of the 2016 Act.

What to ask your adviser instead

• Which creditors hold a third or more of the balance between them, and what their objection record looks like.
• Whether any creditor has been left off the list, because a creditor who is not notified keeps the section 177 petition route open.
• What the expected contribution and anticipated dividend in the pack will say, since creditors read both before deciding whether to object.

Interest is a separate question and is often mixed in with this one. Claims are valued as at the relevant date, so interest is not claimable in the trust deed beyond the date of granting, and how much a trust deed costs in Scotland deals with what comes out of your payments.